3PL (Third-Party Logistics) provider operates warehousing, transportation, or both on behalf of customers.
Detailed Definition
3PL services can include dedicated warehousing, multi-client (shared) warehousing, transportation management, freight brokerage, fulfillment and value-added services such as kitting or relabeling. Some 3PLs are asset based and run their own buildings and trucks, while others manage capacity owned by others. The Transportation Intermediaries Association (TIA) is one US trade group representing 3PLs and freight intermediaries. In a 3PL contract, who supplies pallets and who pays for them should be stated, because pallets are a recurring cost in receiving, storage and shipping.
How 3PLs charge around pallets
Warehouse 3PLs commonly price storage and handling by the pallet position or pallet unit, for example a monthly storage charge per pallet plus handling charges for receiving and shipping each pallet. That makes pallet footprint, height and stackability directly tied to cost. A tall or oversized pallet may be charged as more than one position.
Read the rate sheet for how partial pallets, mixed-SKU pallets and floor-loaded freight that must be palletized on receipt are billed.
Pallet questions to settle in a 3PL agreement
- Who supplies outbound pallets, and to what grade or type, such as 48x40 GMA or pooled rental pallets
- Whether pallets arriving under inbound freight become the 3PL's property or are returned
- How pooled pallets from CHEP, PECO or iGPS are tracked and transferred
- Charges for repalletizing loads that arrive on damaged pallets
- Customer-specific requirements such as retailer pallet and labeling rules
Unclear pallet ownership is a frequent source of billing disputes.
Asset-based and non-asset 3PLs
An asset-based 3PL owns or leases its warehouses, trucks or both. A non-asset 3PL manages services using capacity owned by others, such as carriers it brokers freight to. The model affects who physically handles your pallets and who answers for damage, so confirm it during selection.
Authoritative Sources
- Transportation Intermediaries Association (TIA): the trade association representing US freight intermediaries and 3PL operators.
- Material Handling Institute (MHI): the largest US trade association for material handling, logistics, and supply chain technologies.
Related Glossary Terms
Frequently Asked Questions
What is the difference between a 3PL and a freight broker?
A freight broker arranges transportation between shippers and carriers without taking possession of the freight. A 3PL is a broader term for a company that performs logistics functions for customers, which may include warehousing, fulfillment, transportation management and brokerage. Many 3PLs have a brokerage division, but a pure broker does not store or handle goods.
Why does my 3PL charge more for some pallets than others?
Storage and handling are often priced per pallet position, so anything that uses more space or labor can cost more. Oversized footprints, tall loads that take a full rack opening, pallets that cannot be stacked, mixed-SKU pallets that must be broken down, and damaged pallets that need repalletizing are common reasons. Check the rate sheet definitions.